Case Law Details
Patil Construction & Infrastructure Ltd. Vs Commissioner of State Tax & Ors. (Bombay High Court)
Bombay High Court held before powers under section 83 can be exercised, the Commissioner has to be satisfied that for the purpose of protecting the interest of the government revenue and “it is necessary so to do”, he may attach provisionally any property of the taxable person or any person specified in Section 122(1A). This is a sine qua non for exercising powers under Section 83. This issue is no longer res integra and has been succinctly set out by the Hon’ble Supreme Court in the case of M/s Radha Krishan Industries Vs. State of Himachal Pradesh & Ors.
Hon’ble Supreme Court has opined that the power to order a provisional attachment [under Section 83] of the property of the taxable person, including a bank account, is draconian in nature and the conditions which are prescribed by the statute for a valid exercise of the power must be strictly followed. The Hon’ble Supreme Court has further opined that the exercise of the power for ordering a provisional attachment must be preceded by the formation of an opinion by the Commissioner that “it is necessary so to do” for the purpose of protecting the interest of the Government revenue. The Hon’ble Supreme Court has opined that before ordering a provisional attachment, the Commissioner must form an opinion on the basis of tangible material that the assessee is likely to defeat the demand, if any, and therefore, “it is necessary so to do” for the purpose of protecting the interest of the Government revenue.
The expression “necessary so to do for protecting the government revenue” implicates that the interests of the government revenue cannot be protected without ordering a provisional attachment. Once this is the law laid down by the Hon’ble Supreme Court, and which we find applies with full force to the facts of the present case, we have no hesitation in quashing the impugned attachments in FORM GST DRC-22 dated 5th April 2024 and the order passed under Section 83 also dated 5th April 2024.
Introduction: In a recent judgment, the Bombay High Court delved into the interpretation of Section 83 of the Maharashtra Goods and Services Tax Act, 2017 (MGST Act) concerning provisional attachment orders issued by GST Authorities. The case, Patil Construction & Infrastructure Ltd. Vs. Commissioner of State Tax & Ors., highlighted the stringent compliance required for such actions.
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